How has Ethereum developed post-Merge?
Author: Mumu
Several months ago, Ethereum's highly anticipated transition to Proof-of-Stake (PoS) was regarded as its "big test." Many believed this fundamental shift in consensus mechanism could introduce challenges like "complex vulnerabilities," "centralization risks," or "buy-the-rumor-sell-the-news" scenarios. Now, 60+ days after the Merge (September 15 to November 18), let's examine Ethereum's status and ecosystem progress. Have key concerns been addressed? Are anticipated benefits like deflation materializing?
01 Has Deflation Taken Effect?
Data Source: Ultra Sound Money
As of Day 60 post-Merge, Ethereum's supply has decreased by 5,915.46 ETH, officially entering deflationary territory. But how effective has the much-hyped "triple halving" mechanism (EIP-1559 + PoS) truly been?
Three Distinct Phases:
- Post-Merge Inflation (Sept 15 – Oct 7)
During this bear market lull, with gas prices hovering at 10-15 gwei, Ethereum still saw 12,400 ETH minted (~563 ETH/day). While inflationary, this represented a 97% reduction from pre-Merge issuance (~15,000 ETH/day). - XEN Token Surge (Oct 8 – Nov 8)
The emergence of gas-burning token XEN spiked activity, pushing gas to 20-50 gwei. EIP-1559 burn rates accelerated, nearly offsetting Phase 1's inflation by November 8. - FTX Collapse (Final Week)
CeFi panic triggered massive on-chain movements (gas >100 gwei), cementing Ethereum's deflationary status. Despite being below bull market gas peaks (300-500 gwei), the deflationary impact remained robust.
_Key Takeaway_: Ethereum has reduced potential issuance by ~880,000 ETH ($1.1B+), eliminating what would've been persistent miner sell pressure. This explains ETH's relative resilience amid recent market turmoil.
👉 Explore Ethereum's real-time burn metrics
02 Centralization Concerns: Overblown?
Critics highlight two primary centralization issues post-Merge:
- OFAC-Compliant Blocks: ~43% of blocks follow OFAC standards (per mevwatch).
- Lido's Dominance: Controls ~30% of staked ETH.
However, these concerns warrant context:
- Decentralized Alternatives: Emerging solutions (e.g., DVT validators) will dilute centralized providers' share.
- Vitalik's Perspective: Compared to Bitcoin's 5 mining pools controlling 80% hash rate, Ethereum's PoS isn't inherently more centralized. Lido operates as a protocol with distributed sub-validators.
"Short-term risks are low as major stakers are Ethereum-aligned. Long-term, we need more decentralized options." — Vitalik Buterin
03 SEC Regulation Fears: Unfounded?
Transitioning to PoS raised questions about SEC classifying ETH as a security. But consider:
- Precedent: Multiple PoS chains operate without SEC designation.
- Howey Test Nuances: Profit expectations must rely on a third party's efforts—Ethereum's decentralized development contradicts this.
- Political Realities: Wall Street's Web3 investments and crypto's voter base make aggressive SEC action unlikely.
Even if challenged (à la Ripple case), Ethereum's legal footing appears strong.
04 Network Health Check
Stability: Zero major vulnerabilities detected post-Merge—validating extensive testnet preparations.
Upcoming Upgrades:
- Shanghai Upgrade: Enabling staked ETH withdrawals.
- EIP-4844: Proto-Danksharding to enhance Rollup scalability.
Layer2 Milestone: On November 8, L2 transactions surpassed L1 for the first time (per Orbiter Finance). This marks a tipping point in Ethereum's scalability roadmap.
05 Key Takeaways
- Deflation is Working: Supply dynamics have fundamentally shifted.
- Centralization is Manageable: Solutions are in development; current risks are overstated.
- Regulatory Risks are Low: Political and economic factors deter harsh actions.
- Ethereum is Evolving: Post-Merge stability frees developers to focus on scaling (L2, sharding) and UX improvements.
The true test? Sustaining this momentum through 2024's bull cycle—where deflationary pressures could catalyze unprecedented price discovery.
👉 Stay updated on Ethereum's next-phase developments
FAQ Section
Q1: Is Ethereum now fully deflationary?
A: Only during high-activity periods. Low-usage intervals may still see mild inflation.
Q2: Should I worry about Lido's staking dominance?
A: Not immediately—but supporting decentralized staking pools helps future-proof the network.
Q3: When can stakers withdraw ETH?
A: Likely mid-2024 via Shanghai upgrade, with mechanisms to prevent mass unstaking.
Q4: Will SEC action impact ETH's price?
A: Any negative ruling would face lengthy appeals, limiting short-term effects.
Q5: Are Layer2s now better than "Ethereum killers"?
A: Yes—they offer comparable throughput while inheriting Ethereum's security and liquidity.
Q6: What's the next big Ethereum milestone?
A: Full Danksharding implementation (~2025), potentially reducing L2 fees by 100x.